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Home » News » Global coal consumption reaches all-time high

Global coal consumption reaches all-time high

August 1, 2023 5:54 pm

Global coal consumption reaches all-time high
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Stronger regulations and investments are required to boost the expansion of renewable energy as Asia’s economies continue to rise rapidly, offsetting decreases in Europe and North America.

According to the IEA’s most recent market analysis, global coal consumption reached a new all-time high in 2022 and will remain close to that record level this year due to significant growth in Asia for both power generation and industrial uses outpacing reductions in the United States and Europe.

In 2022, coal consumption increased by 3.3 percent to a record-breaking 8.3 billion tonnes, according to the IEA’s mid-year Coal Market Update, which was released today. The analysis estimates that slight losses in coal-fired power generation in 2023 and 2024 would likely be compensated by increases in industrial coal use, although there will be significant regional variances.

Three out of every four tonnes of coal consumed globally is anticipated to come from China, India, and Southeast Asian nations in 2023. In the European Union, the demand for coal increased very little in 2022 because a brief rise in the production of coal-fired electricity was nearly offset by a decline in industrial use. This year, it’s anticipated that Europe will consume significantly less coal as renewable energy sources grow and nuclear and hydropower somewhat recover from recent declines. Lower natural gas prices in the US are also accelerating the transition away from coal.

Coal markets have so far recovered to more consistent and stable patterns in 2023 after three difficult years defined by the Covid-19 shock in 2020, the strong post-pandemic bounce in 2021, and the upheaval precipitated by Russia’s invasion of Ukraine in 2022. According to estimates, the first half of 2023 saw an increase in the demand for coal of around 1.5 percent, to a total of roughly 4.7 billion tonnes, driven by increases in power generation of 1 percent and non-power industrial applications of 2 percent. 

In the first half of this year, the demand for coal decreased in the United States and the European Union by 24 percent and 16 percent, respectively, quicker than had been anticipated for each region. However, during the first half, demand from the two biggest users, China and India, increased by more than 5 percent, more than offsetting reductions elsewhere.

Keisuke Sadamori, the IEA Director of Energy Markets and Security said, “Coal is the largest single source of carbon emissions from the energy sector, and in Europe and the United States, the growth of clean energy has put coal use into structural decline, but demand remains stubbornly high in Asia, even as many of those economies have significantly ramped up renewable energy sources. We need greater policy efforts and investments – backed by stronger international cooperation – to drive a massive surge in clean energy and energy efficiency to reduce coal demand in economies where energy needs are growing fast.”

The demand for coal is still moving to Asia. China and India used twice as much coal collectively as the rest of the world in 2021, accounting for two-thirds of global consumption. Their share will be close to 70 percent in 2023. The United States and the European Union, which together made-up 40 percent three decades ago and more than 35 percent at the start of this century, now make up less than 10 percent of the global population.

The production side shows the same split. In 2022, the world’s top three coal producers—China, India, and Indonesia—all generated record volumes. Both China and India broke previous records for the month of March 2023, with China topping 400 million tonnes for the second time in history and India breaking 100 million tonnes for the first time. Additionally in March, Indonesia delivered approximately 50 million tonnes of goods abroad, a record-breaking amount. In contrast, the United States, which was formerly the world’s top producer of coal, has seen a more than halving of its output since its high in 2008.

In the first half of 2023, coal prices declined to the same levels as those observed in summer 2021, following the great volatility and high prices of the previous year, which were caused by an abundant supply and reduced natural gas costs. After the disruptive La Niña weather that had impeded output subsided, thermal coal prices dropped back to below coking coal prices, and the large premium for Australian coal shrank. In spite of being prohibited in Europe, Russian coal has found new markets, frequently at significant discounts.

For some price-conscious purchasers, cheaper coal has made imports more appealing. Chinese imports nearly doubled in the first half of this year, and the worldwide coal trade is predicted to expand by more than 7 percent in 2023, exceeding the expansion in global consumption, to reach record levels. The record-breaking 1.3 billion tonnes of seaborne coal transport in 2019 may well be surpassed in 2023.

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